Good morning!
Mixed price action as traders assess weather... Corn futures are down a penny amid some light profit-taking after a quiet overnight session. Soybean futures are up 4 to 5 cents thanks to concerns about the dry forecast through mid-month and unease about the impact of Hurricane Irma. Winter wheat futures are narrowly mixed, while spring wheat is up 3 to 5 cents. The U.S. dollar index is posting solid losses, while crude oil futures are facing light pressure.
Dry weather to persist... The National Weather Service forecast for Sept. 12-16 calls for conditions to remain dry across the Corn Belt and Plains, with the exception of Ohio where normal precipitation is anticipated. The temperature outlook is more varied. Warm weather is likely in the Dakotas, Nebraska and Minnesota, normal temps are likely for Iowa, and the rest of the Midwest along with the Central and Southern Plains are likely to see cool conditions, according to NWS.
Irma lashes the Caribbean as Florida awaits... The hurricane, one of the most powerful storms ever recorded, left chaos from Barbuda to Puerto Rico and is headed west to other islands today. At least 11 deaths have been reported. The storm is expected to reach Florida on Sunday. “I cannot stress this enough,” Gov. Rick Scott said on Wednesday. “Do not ignore evacuation orders."Irma is increasingly likely to target parts of the Florida peninsula as a dangerous hurricane this weekend,” according to the Weather Channel. “Parts of Georgia and the Carolinas could then be struck by Irma early next week.”
Trucking costs soar... Trucking costs in the U.S. Gulf Coast region are surging in the wake of Hurricane Harvey, the Wall Street Journal reports, as rigs get diverted to the Texas recovery effort and another storm approaches the Florida coast. The spot-market price to ship on a tractor-trailer from Dallas to Houston jumped 66% in the past week, according to online load board DAT Solutions LLC, the result of high demand for relief supplies and the severe imbalance of serving a region that’s producing little to pay for return trips. Diesel fuel prices also are rising fast because of shortages caused by the shutdown of refineries and delivery networks. Freight operators should get a boost as demand for construction materials grows with the rebuilding effort. As for Irma, freight railroads are working under a rail emergency situation and ports as far north as Savannah, Ga., are prepared to shut down if the storm turns up the coast.
Global wheat prices slip as cereal supplies build... Global food prices slipped in August as lower values for cereals, sugar and meat more than made up for increases in vegetable oil and dairy prices, according to the Food and Agriculture Organization of the United Nations (FAO). Its food price index dipped 2.3 points from July to August to 176.6 points. FAO expects global cereal production to hit a record in 2017, boosting global cereal supplies for 2017-18. “The bulk of the revision follows improved production prospects for wheat and coarse grains,” it explains. FAO now pegs global wheat production for 2017 at 748.8 MMT, up 8.9 MMT from July, as improved prospects for Russia offset downward revisions for the U.S. and Canada.
Beige Book update notes continued flat inflation... Several Federal Reserve districts mentioned a lack of inflation -- steady prices -- in their recaps released in the Beige Book report, the economic snapshot released two weeks prior to the conclusion of the Federal Open Market Committee. However, the overall summary on prices said, “Prices rose modestly overall across the country.” Wages are still not moving a lot as the update noted “limited wage pressures and modest to moderate wage growth.” So it appears the Fed will be still be grappling with the issue of inflation when it meets September 19-20 and will also have another hurricane to consider. Since no monetary policy shifts are expected, the start of the balance sheet trim, updated economic forecasts and the post-meeting press conference by Fed Chairwoman Janet Yellen will be the focal points.
White House said to assure KORUS exit off table... The White House “has assured key lawmakers that its threat to begin withdrawing from the U.S.-Korea Free Trade Agreement has -- for now -- been taken off the table,” Inside U.S. Trade reported, citing unnamed sources.
Trump makes a deal with Democrats... President Donald Trump bypassed members of his party on Wednesday, reaching an agreement with congressional Democrats to increase the debt limit and to finance the government until mid-December. GOP conservatives were very upset as were Republican leaders. Trump later confirmed that a continuing resolution and suspension of the debt limit until Dec. 15 would be added to the $7.85 billion Hurricane Harvey emergency aid bill (the House voted 419-3 on Wednesday to send the emergency spending package to the Senate.) “We have a very good meeting with Nancy Pelosi (D-Calif.) and Chuck Schumer (D-N.Y.),” he said. Get more details.
Data confirms France’s wheat crop in better shape than year-ago... France’s soft wheat crop is of high-quality this season, according to test results from the technical institute Arvalis. Seventy-four percent of the crop showed specific weights above the widely used commercial benchmark of 76 kg. per hectoliter, versus just 24% that made the cut last year. Protein levels are also solid, with 92% of the crop equal to or above 11.5%, a level used by importers like Egypt and West Africa. But just 65% of the crop has protein above 12%. Also, more of the crop has good Hagberg falling numbers than year-ago.
Indian mills to boost wheat imports near-term... From September to October, India will likely bring in roughly 800,000 MT of wheat from the Black Sea region, according to two trade sources cited by Reuters. Millers are expected to increase reserves amid concerns that tight domestic supplies as year-end approaches could lift prices. Even with the 10% import duty and cost and freight expenses, Black Sea wheat prices are similar to those for Indian new-crop wheat, according to one of the sources.
Japan to raise prices for imported wheat... Japan will sell imported wheat to domestic millers at an average price of 52,510 yen ($482) per metric ton from October to March, according to its ag ministry. This represents a 3.6% rise from the previous six-month period, as wheat prices have climbed in the U.S. and Australia alongside shipping rates. Plus the yen has weakened. Japan holds regular import tenders where it buys wheat from Australia, Canada and the U.S., which it then turns around and sells to millers at prices that are set twice a year.
Retailers buying some beef for fall features... Boxed beef movement surged to 168 loads on Wednesday on a 20 cent (Select) to 48 cent (Choice) rise in boxed beef values, signaling some buying for fall features is underway. This plus impressive packer cutting margins (nearly $150 a head) could lead to steady or better cash cattle trade, despite a slight uptick in showlist estimates this week. This week’s online Fed Cattle Exchange auction provided little guidance regarding cash direction as none of the cattle offered sold. So far, just a few hundred head have changed hands in Iowa around $103.
Added processing impacting hog market... The impact of increased processing capacity is showing up in strong daily slaughter numbers. Wednesday’s kill was impressive at 450,000 head, up 24,000 head from last year at this point. Meanwhile, cash hog bids were again mixed across the Midwest as competition has increased thanks to this added slaughter capacity. Packers are enjoying strong cutting margins topping $40 a head.
Overnight demand news... Jordan made no purchase in its tender to buy 100,000 MT of milling wheat or 100,000 MT of feed barley. But the country issued a new tender to buy 100,000 MT of hard milling wheat from optional origins. Turkey tendered to buy 60,000 MT of animal feed barley.
Today’s reports:
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 9:30 a.m., Weekly Ethanol Production -- EIA
- 10:00 a.m., Livestock and Meat International Trade Data -- ERS
- 2:00 p.m., U.S. Agricultural Trade Data Update -- ERS
- 2:00 p.m., Broiler Hatchery-- NASS
